Challenges of Financing Small & Medium Enterprises [smes] Inequity Bank Branches in Kenya
View/ Open
Date
2013-11Author
Okoth, Michael O
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The study was seeking to determine the challenges faced by Equity Bank branches in financing
SMEs in Kenya and examine how it’s trying to address these challenges. The unit of study was
Equity Bank (K) Limited and judgmental sampling was used to select 50 branches to be
studied. Primary data was collected using structured questionnaires while the published
financial statements for the Bank were the main sources of secondary data. The questionnaires
were divided into three sections; section A addressed the background information on Equity
Bank; section B addressed SME products offered by the bank while section C addressed the
challenges in the process of extending finance to SMEs. Major challenges faced by the Equity
bank branches as revealed by the study in the process of lending to small businesses are that:
most SMEs do not submit mandatory documents required for financing, 66.7% of SMEs submit
cash flow projections while 52.8% submit certificates of registration/incorporation and
securities provided are weak as 22% provides chattels mortgage and inventory hypothecation
while only 4% provide housing as their collateral. This indicates a bigger challenge the bank
branches face in financing this sector. Detailed information on the bank’s operation especially
on the guarantee schemes, sources of funds and the total sum of SME lending book could not
be availed due to the bank’s confidentiality policy. These were some of the challenges faced
while collecting data in the field. An empirical survey should be done to include all of the 160
branches in Kenya which might produce representative results. The study recommends that a
further research could also be done to look into different financing strategies adopted by
commercial banks in serving the SME sector.
Citation
Degree Of Master Of Business AdministrationPublisher
University of Nairobi School of Business
Description
A research project submitted in partial fulfillment
of the requirement for the award of the degree of
Master of business administration, school of business,
University of Nairobi